Chromalloy American Corp. v. Sun Chemical Corp.

611 F.2d 240 (1979)

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Chromalloy American Corp. v. Sun Chemical Corp.

United States Court of Appeals for the Eighth Circuit
611 F.2d 240 (1979)

  • Written by Tammy Boggs, JD

Facts

In January 1978, Sun Chemical Corporation (Sun) (defendant) began purchasing significant amounts of the stock of a significantly larger public corporation, Chromalloy American Corp. (Chromalloy) (plaintiff). By February 1979, Sun had acquired over 5 percent of Chromalloy’s outstanding stock, requiring Sun to comply with Section 13(d) of the Securities Exchange Act of 1934 and file a Schedule 13D disclosure form. In its first filed Schedule 13D, Sun disclosed that it had an intent to increase its holdings in Chromalloy, had had discussions with Chromalloy’s directors and managers about Sun’s intent, and might “at any time” decide to seek control of Chromalloy. In four subsequent amendments of Schedule 13D filed in 1979, Sun disclosed its plans to purchase additional stock in Chromalloy and that it sought to gain representation on Chromalloy’s board of directors. However, Sun disclaimed any intent to control Chromalloy. By late July 1979, Sun owned nearly 10 percent of Chromalloy’s stock. Chromalloy sued Sun, seeking an injunction to compel Sun to disclose a purpose to acquire control of Chromalloy and to require Sun to stop purchasing Chromalloy’s stock for 90 days. The district court granted the requested injunction in part, ordering Sun to disclose its control purpose. Chromalloy appealed the partial denial of its requested injunction, and Sun cross-appealed, challenging the disclosure order.

Rule of Law

Issue

Holding and Reasoning (Henley, J.)

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